Otsego EDA weighs use of state housing aid, reviews loan policy and TIFs; elects officers, approves newspaper and depository

At its Feb. 10, 2025 meeting, the City of Otsego Economic Development Authority heard staff briefings on the agency's available balances and options for spending new statewide affordable housing aid, reviewed its economic development revolving loan policy and updates on three active tax increment financing (TIF) districts, and conducted routine elections and housekeeping votes.

City staff reported the EDA fund had an unaudited cash balance of about $389,000 and that approximately $105,000 from 2023 and 2024 is restricted by the state's affordable housing aid program, with an expected additional allocation in 2025 of just under $24,000, leaving roughly $130,000 that would carry restrictions tied to the state guidance. Staff also said the unassigned (locally controlled) portion of the EDA revolving fund totaled $283,932. "I will report that as of today, staff does not have a recommendation for the board on how to proceed," a city staff member, Dan, told the authority, citing legislative restrictions and the limited experience of many cities applying the program.

The staff briefing described the statutory timing tied to the aid: funds must be obligated by the end of the third year after receipt and spent by the end of the fourth year. "So the first aid was received in 2023, so you'd have to spend that money by the end of 2027," Dan said, referencing the timeline described in materials from the state Department of Revenue that were included in the meeting packet.

Board members discussed possible approaches, including partnering with Wright County, which is hiring a staff position to study housing aid distribution and may recommend whether county-managed programs or city-administered programs are preferable. Staff said several cities (City of Monticello, Buffalo and St. Michael were named in the packet) also received direct allocations because their populations exceed the $10,000 threshold used to direct funds to cities rather than counties.

In related economic development items, staff reviewed the EDA's revolving loan policy (adopted in 2013 and never used for a loan), noting the program is typically intended for gap financing with a maximum loan of $50,000 and that some criteria make newer businesses difficult candidates. Staff said it had obtained a comparable policy from another Wright County city that recently issued a loan and offered to present suggested minor changes. Board discussion focused on whether the EDA should refresh priorities in the policy's high/medium/low priority project list to match current council goals and to avoid spending significant staff and consultant time on projects the board would not support.

Staff also updated commissioners on three active TIF districts, noting Great River Center's district will expire after the 2026 tax year and that when a district decertifies the increment returns to the normal taxing authorities. Dan summarized that the three districts serve different purposes (economic development, affordable housing with a 20% affordability requirement for a portion of units, and redevelopment) and that those expirations will shift tax capacity back into the general tax base.

The memo reviewed a Parkview Retail tax payment/reimbursement arrangement under which the county agreed to share tax reimbursement and the county will reimburse the city up to $400,000 for infrastructure investments tied to development in that area. Staff also briefed the authority on three city-owned commercial parcels (one at Great River Center and two in Waterfront East) that remain on the market with Commercial Realty Solutions; deed restrictions and height/use limits were noted for some waterfront parcels.

On routine governance, the EDA elected officers by voice vote. Corey Tanner moved to nominate Mayor Stockamp as president; Ryan seconded and the motion passed. The board likewise elected Tina as vice president, Ryan as treasurer, Michelle as assistant treasurer and Audra (a staff member) as secretary. The EDA approved Resolution 2025-01 designating the Star News as the EDA's official newspaper and Resolution 2025-02 designating US Bank as official depository for EDA funds tied to the recent bond issuance and indenture of trust. All votes on those resolutions were taken by voice and recorded as passing.

The meeting also included a brief report on conduit bond-related fees: staff said the city had received conduit fees tied to two outstanding conduit bond issues (Kaleidoscope Charter School and Guardian Angels/Evans Park) and that those fees are a primary source of the unassigned economic development fund balance. Staff said the construction account and bond fund balances held at US Bank total approximately $17,840,935 in construction-related accounts and $815,085 in the bond fund, as of January reconciliation included in the packet.

Board direction: Commissioners asked staff to gather comparable revolving-loan policies from neighboring cities, to return with recommended changes, and to coordinate with Wright County's forthcoming housing staff recommendation before proposing how Otsego might spend its restricted statewide affordable housing aid. No formal action was taken on program design; next steps were a staff research assignment and future discussion by the EDA and city council.

Ending: The authority adjourned after the regular business and a brief marketing discussion about how the county economic development partnership and the city's contracted broker, Commercial Realty Solutions, are promoting available sites.